A PROJECT ON “A STUDY ON RETAIL ADVERTISING AND ITS IMPACT ON CONSUMER CHOICE” by MILON MALLICK 2491000044 For partial fulfillment of the requirements of final year MBA curriculum of Two years Full time MBA (Industry Integrated) Programme. Submitted to: Through 1
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A PROJECT ON
“A STUDY ON RETAIL ADVERTISING AND ITS IMPACT ON CONSUMER CHOICE”
by
MILON MALLICK
2491000044
For partial fulfillment of the requirements of final year MBA curriculum of Two years Full time MBA (Industry Integrated) Programme.
Submitted to:
Through
1
STUDENT’S DECLARATION
I hereby solemnly affirm, declare and state that report on “A Study on
retail advertising and its impact on consumer choice” was done by
me with due diligence and sincerity and this report based on that study is
a bonafied work by me and submitted to ANNAMALAI UNIVERSITY
through RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES
under the guidance and supervision of Prof Julie Sunil, Faculty RIMS is
my original work and not submitted for the award of any other degree,
diploma, fellowship or other similar title or prizes.
PLACE: BANGALORE Signature:
DATE:
2
CERTIFICATE FROM THE GUIDE
This is to certify that the project report titled “A Study on retail
advertising and its impact on consumer choice” by Milon Mallick,
Enrolment No.2491000044 carried out in partial fulfillment for the
award of degree of MBA (Industry Integrated) programme of Annamalai
University at RIMS, Bangalore under my guidance and direction. This
study report is an original work and not submitted earlier to any
University/Institute.
PLACE: BANGALORE Signature:
DATE: Guide Name
3
TABLE OF CONTENTS
Contents Page no.
Title 1
Student declaration 2
Certificate from the guide 3
Acknowledgement 5
List of tables and diagrams 6
Executive summary 7
Introduction 8-24
Survey of literature 25-30
Research methodology 31-32
Testing of hypothesis 33-36
Analysis of research result 37-43
Findings 44-45
Conclusion 46
Limitation of studies 47-48
Bibliography 49
Appendix-1 50-54
Appendix-2 55-59
ACKNOWLEDGEMENT
4
I am grateful to our beloved Director Dr. M R PATTABHIRAMRAM, our dean
Dr. Y RAJARAM, Coordinator Prof. SREERENGAN V.R for inspiring me to take
up this project.
I extend my special gratitude to, my project guide Prof. JULIE SUNIL who has been
supporting and helping me throughout my project which was the best thing that happened to me
during the research. I could understand market research from her. I do not have enough words to
express my gratitude to her.
They gave me confidence to complete my project and made me understand every step
of the project. They guided me constantly during all the phases of the project and corrected me
whenever I was wrong in the project work. They have made the completion of the project
possible; I do not have words to express my gratitude to them.
.
Sincerely
STUDENT NAME: Milon Mallick
(Reg. No.2491000044)
List of table and diagrams:
Sr.no particular Page no.
5
1. Testing of hypothesis (acceptance of alternative hypothesis) 34
2. Testing of hypothesis (acceptance of alternative hypothesis) 35
3. Testing of hypothesis (acceptance of alternative hypothesis) 36
4. The retail advertisement has increased in which media 38
5. Retail ads in proportion to company ads and Spending on retail
39
6. Retail ads in newspaper for special offers andcompare prices shown in retail ads
40
7. Shopping decisions due to information gathered from retail adsAnd membership card of retail
41
8. Gathering membership cards from new retailers andSMS /email updates about new sales promotions by retailers
42
9. Always act on the information given in the SMS / email 43
EXECUTIVE SUMMARY
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Indian retail sector is witnessing one of the most hectic marketing activities of all times. The
companies are fighting to win the hearts of customer who is God said by the business tycoons.
There is always a ‘first mover advantage’ in an upcoming sector. In India, that advantage goes to
“BIG BAZAAR” followed by “RELIANCE FRESH”. It has brought about many changes in the
purchasing habits of people. It has created formats, which provide all items under one roof at low
rates, or so it claims. In this project, we will study its marketing strategies and promotional
activities.
The research titled “STUDY OF RETAIL ADVERTISING AND ITS IMPACT ON
CONSUMER CHHOICE “helps us to understand the factors effecting the buying decision.
which is responsible for affecting customer towards big bazaar, reliance fresh etc.This study
helpful to top level management to improve the customer purchasing decision on retail sector.
This research is a study on impact of retail advertising at retail sector. The research was carried
out as per the steps of Marketing Research. The well supportive objectives were set for the study.
To meet the objectives primary research was undertaken. The data collection approach adopted
survey research. The instrument used for the data collection was questionnaire. The target
respondents were the visitors of BIG BAZAAR as well as RELIANCE FRESH, with the sample
size of 100 for my research project from the outlets of the company. Tables & charts were used
to translate responses into meaningful information to get the most out of the collected data.
Based on those the inferences have been drawn with peer supportive data.
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Introduction
Introduction
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Advertising is a form of communication used to encourage or persuade an audience (viewers,
readers or listeners) to continue or take some new action. Most commonly, the desired result is to
drive consumer behavior with respect to a commercial offering, although political and
ideological advertising is also common. The purpose of advertising may also be to reassure
employees or shareholders that a company is viable or successful. Advertising messages are
usually paid for by sponsors and viewed via various traditional media; including mass media
such as newspaper, magazines, television commercial, radio advertisement, outdoor
advertisement or direct mail.
Commercial advertisers often seek to generate increased consumption of their products or
services through branding, which involves the repetition of an image or product name in an effort
to associate certain qualities with the brand in the minds of consumers. Non commercial
advertisers who spend money to advertise items other than a consumer product or service include
political parties, interest groups, religious organizations and governmental agencies. Non profit
may rely on free modes of persuasion, such as a public service announcement (PSA).
Modern advertising developed with the rise of mass production in the late 19th and early 20th
centuries.
In 2010, spending on advertising was estimated at $142.5 billion in the United States and $467
billion worldwide.
According to YAHOO FINANCE top five advertising holding companies worldwide revenue are
1. OMNICOM GROUP
2.
WPP GROUP
3.
THE INTERPUBLIC GROUP OF COMPANIES
4.
PUBLICIS GROUP S.A
5.
DENTSU INC
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The Principle of Advertisement
Advertisement is an encapsulated communication about a product (good/services), a clearly
designed, concise, aesthetically appealing and content-wise accurate communiqué intended to
effectively persuade the target audience(viewers/listeners/readers) to arrive at a decision as
desired by the advertiser often concerning the product (goods/service). Usually the aim of an
advertisement is to increase the sales of a product introduced into the market. The advertisement
will speak about the salient features of the product on offer and the benefit the
customer/consumer can derive out of the product. It can also educate the target audience about
the various other details such as the products cost, availability, usage modalities, problems that
may arise whiles using it and the probable solutions to those problems etc.
Advertisement also is used to inform a mass of audience about various socially relevant factors
such as employment, upcoming events, contests or elections or a host of other such events. Now
newer media of advertisements are emerging and growing. Internet based media like social
networks, web portals, trade portals etc. are some of those. Marketing managers conceptualise
special event simply to coercively communicate product related sales communications. Normally
the advertisements are prepared in such a way that they attract the attention of the intended
parties easily. Thoughtfully constructed copy (words/diction of an advertisement), interesting
visual or pictures, attractive colours and designs, a uniquely arrived at theme, the central steam
of thought, etc. arouse interest of the customers, and help to retain the interest. Persuasive
elements of the advertisement drive the customers towards a strong desire to possess the product.
This finally leads them toward buying or possessing the product. Professional managers don’t
construe this as the final point in advertising. They proceed for an extra mile to ensure the initial
trial becomes a success and ensures repeated clientele.
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HISTORY OF ADVERTISING
Egyptians used papyrus to make sales messages and wall posters. Commercial messages and
political campaign displays have been found in the ruins of Pompeii and ancient Arabia. Lost and
found advertising on papyrus was common in Ancient Greece and Ancient Rome. Wall or rock
painting for commercial advertising is another manifestation of an ancient advertising form,
which is present to this day in many parts of Asia, Africa, and South America. The tradition of
wall painting can be traced back to Indian rock art paintings that date back to 4000 BC. History
tells us that Out-of-home advertising and billboards are the oldest forms of advertising.
As the towns and cities of the Middle Ages began to grow, and the general populace was unable
to read, signs that today would say cobbler, miller, tailor or blacksmith would use an image
associated with their trade such as a boot, a suit, a hat, a clock, a diamond, a horse shoe, a candle
or even a bag of flour. Fruits and vegetables were sold in the city square from the backs of carts
and wagons and their proprietors used street callers (town criers) to announce their whereabouts
for the convenience of the customers.
As education became an apparent need and reading, as well as printing, developed advertising
expanded to include handbills. In the 18th century advertisements started to appear in weekly
newspapers in England. These early print advertisements were used mainly to promote books
and newspapers, which became increasingly affordable with advances in the printing press; and
medicines, which were increasingly sought after as disease ravaged Europe. However, false
advertising and so-called "quack" advertisements became a problem, which ushered in the
regulation of advertising content.
As the economy expanded during the 19th century, advertising grew alongside. In the United
States, the success of this advertising format eventually led to the growth of mail-order
advertising.
In June 1836, French newspaper La Presse was the first to include paid advertising in its pages,
allowing it to lower its price, extend its readership and increase its profitability and the formula
was soon copied by all titles. Around 1840, Volney B. Palmer established the roots of the
modern day advertising agency in Philadelphia. In 1842 Palmer bought large amounts of space in
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various newspapers at a discounted rate then resold the space at higher rates to advertisers. The
actual ad - the copy, layout, and artwork - was still prepared by the company wishing to
advertise; in effect, Palmer was a space broker. The situation changed in the late 19th century
when the advertising agency of N.W. Ayer & Son was founded. Ayer and Son offered to plan,
create, and execute complete advertising campaigns for its customers. By 1900 the advertising
agency had become the focal point of creative planning, and advertising was firmly established
as a profession. Around the same time, in France, Charles-Louis Havas extended the services of
his news agency, Havas to include advertisement brokerage, making it the first French group to
organize. At first, agencies were brokers for advertisement space in newspapers. N. W. Ayer &
Son was the first full-service agency to assume responsibility for advertising content. N.W. Ayer
opened in 1869, and was located in Philadelphia.
At the turn of the century, there were few career choices for women in business; however,
advertising was one of the few. Since women were responsible for most of the purchasing done
in their household, advertisers and agencies recognized the value of women's insight during the
creative process. In fact, the first American advertising to use a sexual sell was created by a
woman – for a soap product. Although tame by today's standards, the advertisement featured a
couple with the message "The skin you love to touch".
In the early 1920s, the first radio stations were established by radio equipment manufacturers and
retailers who offered programs in order to sell more radios to consumers. As time passed, many
non-profit organizations followed suit in setting up their own radio stations, and included:
schools, clubs and civic groups. When the practice of sponsoring programs was popularised,
each individual radio program was usually sponsored by a single business in exchange for a brief
mention of the business' name at the beginning and end of the sponsored shows. However, radio
station owners soon realised they could earn more money by selling sponsorship rights in small
time allocations to multiple businesses throughout their radio station's broadcasts, rather than
selling the sponsorship rights to single businesses per show.
This practice was carried over to commercial television in the late 1940s and early 1950s. A
fierce battle was fought between those seeking to commercialise the radio and people who
argued that the radio spectrum should be considered a part of the commons – to be used only
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non-commercially and for the public good. The United Kingdom pursued a public funding model
for the BBC, originally a private company, theBritish Broadcasting Company, but incorporated
as a public body by Royal Charter in 1927. In Canada, advocates like Graham Spry were
likewise able to persuade the federal government to adopt a public funding model, creating
the Canadian Broadcasting Corporation. However, in the United States, the capitalist model
prevailed with the passage of the Communications Act of 1934 which created the Federal
Communications Commission (FCC). However, the U.S. Congress did require commercial
broadcasting companies to operate in the "public interest, convenience, and necessity". Public
broadcasting now exists in the United States due to the 1967 Public Broadcasting Act which led
to the Public Broadcasting Service (PBS) and National Public Radio (NPR).
In the early 1950s, the DuMont Television Network began the modern practice of selling
advertisement time to multiple sponsors. Previously, DuMont had trouble finding sponsors for
many of their programs and compensated by selling smaller blocks of advertising time to several
businesses. This eventually became the standard for the commercial television industry in the
United States. However, it was still a common practice to have single sponsor shows, such
as The United States Steel Hour. In some instances the sponsors exercised great control over the
content of the show—up to and including having one's advertising agency actually writing the
show. The single sponsor model is much less prevalent now, a notable exception being
the Hallmark Hall of Fame.
In the 1960s, campaigns featuring heavy spending in different mass media channels became
more prominent. For example, the Esso gasoline company spent hundreds of millions of dollars
on a brand awareness campaign built around the simple and alliterative theme Put a Tiger in
Your Tank. Psychologist Ernest Dichter and DDB Worldwide copywriter Sandy Sulcer learned
that motorists desired both power and play while driving, and chose the tiger as an easy–to–
remember symbol to communicate those feelings. The North American and
laterEuropean campaign featured extensive television and radio and magazine ads, including
photos with tiger tails supposedly emerging from car gas tanks, promotional events featuring real
tigers, billboards, and in Europe station pump hoses "wrapped in tiger stripes" as well as pop
music songs. Tiger imagery can still be seen on the pumps of successor firm ExxonMobil.
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The late 1980s and early 1990s saw the introduction of cable television and particularly MTV.
Pioneering the concept of the music video, MTV ushered in a new type of advertising: the
consumer tunes in for the advertising message, rather than it being a by-product or afterthought.
As cable and satellite television became increasingly prevalent, specialty channels emerged,
including channels entirely devoted to advertising, such as QVC, Home Shopping Network,
and ShopTV Canada.
With the advent of the ad server, marketing through the Internet opened new frontiers for
advertisers and contributed to the "dot-com" boom of the 1990s. Entire corporations operated
solely on advertising revenue, offering everything from coupons to free Internet access. At the
turn of the 21st century, a number of websites including the search engine Google, started a
change in online advertising by emphasizing contextually relevant, unobtrusive ads intended to
help, rather than inundate, users. This has led to a plethora of similar efforts and an increasing
trend of interactive advertising.
The share of advertising spending relative to GDP has changed little across large changes
in media. For example, in the US in 1925, the main advertising media were newspapers,
magazines, signs on streetcars, and outdoor posters. Advertising spending as a share of GDP was
about 2.9 percent. By 1998, television and radio had become major advertising media.
Nonetheless, advertising spending as a share of GDP was slightly lower—about 2.4 percent.
A recent advertising innovation is "guerrilla marketing", which involve unusual approaches such
as staged encounters in public places, giveaways of products such as cars that are covered with
brand messages, and interactive advertising where the viewer can respond to become part of the
advertising message. Guerrilla advertising is becoming increasing more popular with a lot of
companies. This type of advertising is unpredictable and innovative, which causes consumers to
buy the product or idea. This reflects an increasing trend of interactive and "embedded" ads, such
as via product placement, having consumers vote through text messages, and various innovations
utilizing social network services such as Facebook.
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HISTORY OF ADVERTISING IN INDIA
There has been a long tradition of advertising in India since the first newspapers published in
India in the 19th Century carried advertising. The first advertising agency was established in
1905, B. Datram and Company, followed by The India-Advertising Company in 1907, the
Calcutta Advertising agency in 1909, S.H.Bensen in 1928, J. Walter Thompson Associates
through its Indian associate, Hindustan Thompson Associates in 1929, Lintas (Lever
international Advertising Services) in 1939 and McCann Erikson in 1956. Advertising
expenditure in the 1950s was estimated at $US 300,000. Under the more socialist political
environment of the 1960s and 1970s there was little incentive for companies to advertise because
advertising was not tax deductible. In the 1970s there was a 58% growth in the number of
registered agencies from 106 in 1969 to 168 in 1979, and this included a growth in Indian
agencies. The first advertising appeared on state television in 1976.
With the opening of the economy in the 1980s there was a growth in the number of alliances
with multinational agencies and an expansion in advertising though foreign network participation
in agency ownership was limited. In 1987 Hindustan Thompson was affiliated to J. Walter
Thompson. Lintas, the 2nd ranking agency, held only 4% of its subsidiary, as did Ogilvie and
Mather. Saatchi and Saatchi/Compton had minority interests in Compton as did Lintas. A study
done in 1984 of the largest companies in India found that the ratio of advertising expenditure to
sales had risen from .64 in 1976, to .71 in 1980 to .74 in 1984. Foreign controlled corporations
had the dominant share of total advertising expenditure, and 80% of these were in the consumer
goods sectors. Advertising was very concentrated with the top 50 advertisers accounting for 80%
of the advertising spending and the top 10 advertisers made up 40% of that figure, 32% of the
total. The largest advertiser throughout the period was Hindustan Lever which was nearly 10%
of the advertising budget of the corporate sector companies.Pharmaceutical companies were also
significant advertisers at this time.
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Credit:Ciochetto, L. (2004) Advertising and globalization in India, Media Asia, 31(2):158.
-Indian Advertising starts with the hawkers calling out their wares right from the days when cities and markets first began
-Shop front signages
-From street side sellers to press ads
-The first trademarks
-Handbills distributed separately from the products
18th Century
# Concrete advertising history begins with classified advertising
# Ads appear for the first time in print in Hickey's Bengal Gazette. India's first newspaper (weekly).
# Studios mark the beginning of advertising created in India (as opposed to imported from England) Studios set up for bold type, ornate fonts, more fancy, larger ads
# Newspaper studios train the first generation of visualisers & illustrators
# Major advertisers: Retailers like Spencer's, Army & Navy and Whiteaway & Laidlaw
# Marketing promotions: Retailers' catalogues provided early example
# Ads appear in newspapers in the form of lists of the latest merchandise from England
# Patent medicines: The first brand as we know them today were a category of advertisers
# Horlicks becomes the first 'malted milk' to be patented on 5th June 1883 (No. 278967).
# 1931- National Advertising Service Pr. Ltd. Bombay set up
# 1936- Indian Broadcasting Company becomes All India Radio (AIR)
# 1978 -First television commercial seen
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# 1990-Marks the beginning of new medium Internet # 1991- First India-targetted satellite channel, Zee TV starts broadcast
Overview of Retail Industry:
Retail comes from the Old French word tailer (compare modern French retailer), which means
"to cut off, clip, pare, divide" in terms of tailoring (1365). It was first recorded as a noun with the
meaning of a "sale in small quantities" in 1433 (from the Middle French retail, "piece cut off,
shred, scrap, paring"). Like the French, the word retail in both Dutch and German
(detailhandel and Einzelhandel, respectively) also refers to the sale of small quantities of items.
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a
departmental store, boutique or by mall, in small or individual lots for direct consumption by the
purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be
individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities
from manufacturer or directly or through a wholesaler, and then sells smaller quantities to
the end-user. Retail establishments are often called shops or stores. Retailers are at the end of
the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their
overall distribution strategy. The term "retailer" is also applied where a service provider services
the needs of a large number of individuals, such as a public utility, like electric power.
Shops may be on residential streets, shopping streets with few or no houses or in a shopping
mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a partial or
full roof to protect customers from precipitation. Online retailing, a type of electronic
The role of retail industry is to perform retailing functions efficiently than can wholesalers.
Retail outlets exist in every nook and corner of the country. They make shopping convenient to
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customers. It promotes product to ultimate consumers through promotion schemes, store displays
and point-of-purchase display. It provides long term relationship with the consumers. They also
provide information about competitor’s activities relating to product, price and promotion. They
further assist in market surveys. Customers can match products with needs and purchasing
power. They can get choice in terms of features, advantages and benefits of products. It also
offers varieties of services such as delivery, installation, repair, maintenance, and supply of spare
parts.
The retail industry in Malaysia currently is characterised by several retail formats; each format
has its own problems and developmental needs. The very large format retail stores comprise
hypermarkets and large supermarkets. Foreign retail operators basically own these large format
stores. Examples are Carrefour, Giant, Tesco and Jusco. Currently, this format of retail store is
the fastest growing in terms of sales, not only in Malaysia but also in this region. The second
format is the medium sized supermarkets and/or departmental stores basically owned by local
operators. These types of stores are badly hit by the foreign pressure. The third format is the
smaller stores including pharmacies, garments, electrical goods, accessories and multitude of
different merchandise offered for sale. Finally, the smaller provision stores, including mini
markets and sundry shops, mostly located in housing areas and smaller towns and villages.
Objectives of Retail industry:
Retail is clearly the sector that is poised to show the highest growth in the next five years. The
sector is set for a revolution, as both the present players and new entrants are gearing up to
explore the market. This sector contributes 17% of India’s GDP and the current growth rate is
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8.5%. The present size of the organized retailing sector is approximately 3% and is expected to
grow to 25-30% by the year 2012. There are about 400 new malls, 1600 supermarkets and 350
departmental stores currently under construction. Many players are coming up with huge
investments, due to which the present 12 million mom-and-pop shops and kiranas stores fear
losing their business. Most prediction says that the sector might reach to US$ 400-600 billion by
the year 2012.
Opportunities and Challenges in Retail industry:
Opportunities:
The retail industry in india, according to experts, will be a major employment generator in the
future. Currently, the market share of organised modern retail is just over 4% of the total retail
industry, thereby leaving a huge untapped opportunity.
The sector is expected to see an investment of over $30 billion within the next 4-5 years,
catapulting modern retail in the country to $175-200 billion by 2016, according to Technopak
estimates.
On the total organized retail market of Rs 550 billion, the business of fashion accounts for Rs
300.80 billion, which translates into nearly 55% of the organised retail segment in the country.
Challenges:
The country is facing a severe shortage of talented professionals, especially at the middle-
management level.
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Most Indian retail player are under serious pressure to make their supply chains more efficient in
order to deliver the level of quality and service that consumers are demanding. Long
intermediation chains would increase the cost by 15%.
Lack of adequate infrastructure with respect to roads, electricity, cold chains and ports has
further led to the impediment of a pan-India network of suppliers. Due to these constrains, retail
chain have to resort to multiple vendors for their requirements, thereby, raising cost and price.
The retail sector does not have ‘industry’ status yet making it difficult for retailer to raise finance
from banks to fund their expansion plans.
Government restrictions on the FDI are leading to an absence of foreign players resulting into
limited exposure to best practices.
Types of Retailers:
In some parts of the world, the retail business is still dominated by small family-run stores, but
this market is increasingly being taken over by large retail chain.
Departmental store - very large stores offering a huge assortment of "soft" and "hard goods;
often bear a resemblance to a collection of specialty stores. A retailer of such store carries
variety of categories and has broad assortment at average price. They offer considerable
customer service.
Discount stores - tend to offer a wide array of products and services, but they compete
mainly on price offers extensive assortment of merchandise at affordable and cut-rate prices.
Normally retailers sell less fashion-oriented brands.
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Warehouse stores – warehouses that offer low-cost, often high-quantity goods piled on
pallets or steel shelves; warehouse clubs charge a membership fee;
Variety stores - these offer extremely low-cost goods, with limited selection;
Demographic - retailers that aim at one particular segment (e.g., high-end retailers focusing
on wealthy individuals).
Mom-And-Pop - is a retail outlet that is owned and operated by individuals. The range of
products are very selective and few in numbers. These stores are seen in local community
often are family-run businesses. The square feet area of the store depends on the store holder.
Speciality stores - A typical speciality store gives attention to a particular category and
provides high level of service to the customers. A pet store that specializes in selling dog
food would be regarded as a specialty store. However, branded stores also come under this
format. For example if a customer visits a Reebok or Gap store then they find just Reebok
and Gap products in the respective stores.
General stores - a rural store that supplies the main needs for the local community;
Convenience stores - is essentially found in residential areas. They provide limited amount of
merchandise at more than average prices with a speedy checkout. This store is ideal for
emergency and immediate purchases.
Hypermarkets - provides variety and huge volumes of exclusive merchandise at low margins.
The operating cost is comparatively less than other retail formats.
Supermarkets - is a self service store consisting mainly of grocery and limited products on
non food items. They may adopt a Hi-Lo or an EDLP strategy for pricing. The supermarkets
can be anywhere between 20,000 and 40,000 square feet (3,700 m2). Example: SPAR
supermarket.
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Malls - has a range of retail shops at a single outlet. They endow with products, food and
entertainment under a roof.
Survey of literature
25
Survey of literature
It has been observed that there is increasing number of customer goods and services
offered in recent years suggest that product-line extensions have become a favored strategy
of product managers. A larger assortment, it is often argued, keeps customers loyal and
allows firms to charge higher prices. There also exists a disagreement about the extent to which a
longer product
line translates into higher profits keeping the customer value higher. The academics,
consultants and business people speculated that marketing in the new century would be
very different from the time when much of the pioneering work on customer loyalty was
undertaken (Churchill 1942; Brown 1953; Cunningham 1956, 1961; Tucker 1964; Frank 1967).
Yet there exists the scope for improving the applied concepts as there have been many changes
over conventional ideologies. A study using market-level data for the yogurt category
developed an econometric model derived from a game-theoretic perspective explicitly
considers firms' use of product-line length as a competitive tool (Dragnska and Jain,
2005). On the demand side, the study analytically establishes the link between customer
choice and the length of the product line and includes a measure of line length in the utility
function to investigate customer preference for variety using a brand-level discrete-choice model.
The study reveals that the supply side is characterized by price and line length competition
between oligopolistic firms.
Another study explores qualitatively the understanding of the importance of intangibles as
performance drivers in reference to Swedish organizations using a combination of
evolutionary theory, knowledge-based theory and organizational learning. The study reveals
that the customer values are created towards the new products thro ugh individual
perceptions, and organizational and relation competition. The firm needs to ascertain a
continuous organizational learning process with respect to the value creation chain and measure
performance of the new products introduced in the market. In the growing competitive markets
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the large and reputed firms are developing strategies to move into the provision of innovative
combinations of products and services as 'high-value integrated solutions' tailored to each
customer's needs than simply 'moving downstream' into services. Such firms are developing
innovative combinations of service capabilities such as operations, business consultancy and
finance required to provide complete solutions to each customer's needs in order to augment the
customer value towards the innovative or new products. It has been argued that the
provision of integrated solutions is attracting firms traditionally based in manufacturing and
services to occupy a new base in the value stream centered on 'systems integration' using
internal or external sources of product designing, supply and customer focused promotion
(Davies,2004 ). Besides the organizational perspectives of enhancing the customer value, the
functional variables like pricing play a significant role in developing the customer percep tions
towards the new products.
A study examines the success of new product pricing practices and the conditions upon
which success is contingent discussing three different pricing practices that refer to the use
of information on customer value, competition, and costs respectively. The study argues
that the success of these practices is contingent on relative product advantage and
competitive intensity. The study reveals that there are no general "best" or "bad" practices,
but that a contingency approach is appropriate. Value and pricing models have been developed
for many different products, services and assets. Some of them are extensions and refinements
of convention models value driven pricing theories (Gamrowski & Rachev, 1999; Pedersen,
2000). Also there have been some models that are developed and calibrated addressing
specific issues such as model for household assets demand (Perraudin & Sorensen, 200 0).
The key marketing variables such as price brand name, and product attributes affect
customers' judgment process and derive inference on its quality dimensions leading to customer
satisfaction. The experimental study conducted indicates that
customers use price and brand name differently to judge the quality dimensions and measure the
degree of satisfaction (Brucks , 2000). The value of corporate brand endorsement across
different products and product lines, and at lower levels of the brand hierarchy also needs
to be assessed as a customer value driver. Use of corporate brand endorsement either as a
name identifier or lo go identifies the product with the company, and provides reassurance
27
for the customer (Rajagopal and Sanchez, 2004). A perspective from resource-advantage
theory (Hunt and Morgan, 1995) is used to formulate expectations on the degree to which
the use of information on customer value, competition, and costs contribute to the success
of a price decision. It is argued that the success of these practices is contingent on the relative
customer value the firm has created an d the degree to which this position of relative
value is sustainable in the competitive market place. These expectations are empirically tested
on pricing decisions with respect to the introduction of new industrial capital goods.
Research on consumer reaction to price has been largely confined to examining consumers’
price information search, evaluation of price alternatives, and individual purchase behaviors
without regard to situational influences. At the same time, consumption has often been
dichotomized in terms of its functional-hedonic nature and closely associated with the level of
satisfaction leading to determine the customer value influence (Wakefield and Inman, 2003). As
the new products are introduced, a firm may routinely pass these costs on to consumers
resulting into high prices. However a less obvious strategy in a competitive situation may
be to maintain price, in order to drive the new product in the market with more emphasis
on quality, brand name, post-sales services and customer relations management as non-
price factors. In many ways, such strategies of a firm with the new products may drive the
consumer behavior towards being sensitive to the price increase when it comes to making
a buying decision. Some of the marketplace and experimental studies show that consumers
are more sensitive to changes in price than to innovation and new products introduced by
the firm (Gourville and Koehler, 2004). There are some critical issues associated to the
price sensitive consumer behavior, whether customers are equally price-sensitive while
purchasing products for functional (e.g. purchasing frozen vegetables, toiletries or paper
towels) versus hedonic (e.g. purchasing a high technology computer or a video camera)
consumption situations and whether perceived value derived during consuming the product
influences price sensitivity. It may also be stated that higher price volatility makes
consumers mor e sensitive to gains and less sensitive to losses, while intense price
promotion b y competing brands makes consumers more sensitive to losses but does not
influence consumers’ sensitivity to gains (Hanet, 2001).
28
The studies that advocate the models of building customer value through traditional relationship
marketing discuss the long term value concepts to loyal customers. Most importantly, these
are expected to raise their spending and association with the products and services of the
company with increasing levels of satisfactions that attribute to values of customers (Reichheld
and Sasser, 1990). In the most optimistic settings, such value creation is observed to generate
new customers for new products in view of the customer relationship and value
management strategies of the firm (Ganesh, 2000). In the high customer value framework,
the firm ensures diminished costs to serve (Knox, 1998) and exhibits reduced customer
price sensitivities. A database-driven
approach, customer tenure in reference to the length of a customer's relationship and
values retention with a company has often been used to approximate the loyalty construct
(Ganesh 2000; Reinartz and Kumar, 2000; 2002). Hence the relationship marketing with a
customer value orientation thrives on the concept that raises the length of the customer-
company relationship which contributes in optimizing the profit for the firm (Reichheld
and Sasser, 1990). However, the contributions of long-life customers were generally declining
and in a non-contractual setting short-life but high-revenue customers accounted for a
sizeable amount of profits (Reinartz and Kumar, 2000).
The analysis of the perceived values of customers towards new products is a complex
issue. Despite considerable research in the field of measuring customer values in the recent
past, it is still not clear how value interacts with marketing related constructs. However
there exists the need for evolving a comprehensive application models determining the
interrelationship between
customer satisfaction and customer value, which may help in reducing the ambiguities
surrounding both concepts. One of the studies in this regard discusses the two alternative
models yielding empirically tested results in a cross-sectional survey with purchasing
managers in German y. The first model suggests a direct impact of perceived value on the
purchasing managers' intentions. In the second model, perceived value is mediated by
satisfaction. This research suggests that value and satisfaction can be conceptualized and
measured as two distinct, yet complementary constructs (Eggert and Ulaga, 2002).
29
Improving customer value through faster response times for new products is a significant way to
gain competitive advantage. In the globalization process many approaches to new product
development emerge, which exhibit an internal focus and view the new product
development process as terminating with product launch. However, it is process output that really
counts, such as customer availability. A stud y proposes that with shortening product life
cycles it should pay to get the product into the market as quickly as possible, and indicates
that these markets should be defined on an international basis. The results of the study
reveals that greater new product commercial success is significantly associated with a more
ambitious and speedier launch into
overseas markets as the process of innovation is only complete when potential customers
on a world scale are introduced effectively to the new product (Oakley, 1996). The retail
sales performance and the customer value approach are conceptually and methodically
analogous.
30
Research methodology
31
Research methodology:
Title of the problem:
A study on, “Retail advertising and its impact on consumer choice”.
Statement of the problem:
Due to the changing trend in the field of advertising as per the launch of lot of me too product. The advertising is facing a cluttered situation , where many brand try to promote themselves by similar kind of advertisement. In such case the effectiveness of advertising is critical to impact the customer purchasing behavior. The pattern, content and frequency of retail adds can have a direct impact on sales.
(a) Type of data sources:i. Tools of collecting primary data:
Questionnaire
ii. Sample size: 100 consumers
iii. Sampling data: simple random sampling
iv. Tools of collecting secondary data:
Books
Internet
Magazines
Journal
(b) Hypothesis :
Null hypothesis (Ho) : Retail advertising has no impact on consumer purchase decision.Alternative hypothesis (Ha): There is a significant impact of retail advertising on consumer purchase decision.
(c) Statistical tools for hypothesis testing:
32
Chi-square test.
TESTING OF HYPOTHESIS
33
TESTING OF HYPOTHESIS
TABLE 1:
Gender Male Female Total (%)
Newspaper 20 10 30
Radio 8 12 20
T.V 3 7 10
Magazine 20 10 30
Outdoor hoarding 4 6 10
55 45 100
Chi- square calculated value = 8.52
Chi- square table value = 8.488
So, Chi- square calculated value > Chi- square table value
Hence alternative hypothesis is accepted.
34
Table 2:
Gender Male Female Total (%)
Agree 25 15 40
Somewhat agree 20 10 30
Neither agree/ disagree 3 7 10
Somewhat disagree 4 6 10
Disagree 3 7 10
55 45 100
Chi- square calculated value = 12.02
Chi- square table value = 8.488
So, Chi- square calculated value > Chi- square table value
Hence alternative hypothesis is accepted.
35
Table 3:
Gender Male Female Total (%)
Agree 17 3 20
Somewhat agree 25 15 40
Neither agree/ disagree 3 7 10
Somewhat disagree 8 12 20
Disagree 2 8 10
55 45 100
Chi- square calculated value = 11.51
Chi- square table value = 8.488
So, Chi- square calculated value > Chi- square table value
Hence alternative hypothesis is accepted.
36
Data analysis and interpretation
Data analysis and interpretation
37
Table 1: The retail advertisement has increased in which media?
Newspaper30%
radio20%
T.V10%
Magazine30%
Outdoor hoarding10%
Media
From the above chart we can see that retail advertisement has been increased in newspaper and magazine with 30% each. The result shows that newspaper and magazine are mostly used media for retail ads. Whereas radio, T.V and outdoor hoarding contributing 20% , 10% and 10% respectively.
Table 2: Retail ads have increased in proportion to company ads
38
agree 40%
somewhat agree30%
Neither agree /
disagree10%
somewhat disagree
10%
disagree10%
proportion
40% of the respondent are agreed that retail ad have increased in proportion to company’s ad and 30% are somewhat agree. Rest of the three categories is with 10% each.
Table 3: Due to retail ads, I spend more than I did earlier
agree20%
somewhat agree40%
neither agree/
disagree10%
somewhat disagree20%
disagree10%
Expenditure
From the above chart it is clear that 40% of the respondent are somewhat agree with their expenditure has increased due to the effect of retail ads and only 10% disagree with it. Also 20% agree, 20% somewhat disagree and 10% neither agree/ disagree.
Table 4: I look for retail ads in newspaper for special offers
39
always40%
often20%
occasionally20%
seldom10%
never10%
Here we can see that 40% of the respondent look for special offers in newspaper and very less number of people, (i.e,10%) never look for special offer. 20% of respondent often, 20% occasionally and 10% seldom look for the same.
Table 5: I compare prices shown in retail ads with those given by others
always20%
often20%
occasionally10%
seldom40%
never10%
compare
40% of respondent seldom compare price shown in retail ads but in the other hand 20% always ,20% often , occasionally and never with 10% each.
Table 6: I am able to make better shopping decisions due to information gathered from retail ads
40
always40%
often30%
occasionally10%
seldom10%
never10%
40% of the respondent said that they always make better shopping decision due to information gathered from retail ads on the other hand only 10% said never. Whereas 30% of respondent said often, 10% occasionally and seldom each.
Table 7: I have membership card of retail
Yes70%
No30%
membership card
Above chat shows that 70% of the respondent have membership card and only 30% does not
have it.
Table 8: I don’t mind gathering membership cards from new retailers
41
Yes60%
No40%
60% 0f the respondent don’t mind gathering membership card for new retailers whereas 40%
said no.
Table 9: I get SMS /email updates about new sales promotions by retailers
always40%
often20%
occasionally20%
seldom10%
never10%
SMS/email update
Here 40% of the respondent said that they always get SMS/email updates whereas only 10%
said they never get updates. Also 20% of the respondent said often, 20% occasionally and 10%
seldom about the SMS/ email updates.
42
Table 10: I always act on the information given in the SMS / email
always20%
often10%
occasionally50%
seldom10%
never10%
Sales
50% of the respondent act on the information given in the SMS/email and 10% each
said seldom, often, never. Also 20% said they always act as per the given information.
43
FINDINGS
CONCLUSION
FINDINGS
44
According to the study undertaken it was found that retail advertisement has seen a
increase in newspaper most of the ads for retail ads are seen in the newspapers.
Newspaper helps the retail company to reach the houses.
Retail ads have increased in last few years in comparison to company ads.
It is to be noted that survey helped to find out that people are spending more after seeing
the advertisement of retail. As highest percentage of the respondent surveyed agreed to
the point that their expenditure has increased after seeing the advertisement.
By the survey it was found that people are more concerned with the prices of different
retail, they look for special offers in the ads given by retail companies.
Advertisement with special offers and prices helps the customer to make better shopping
decision for their purchase and customer always pays attention to this type od ads.
It was found that people prefer to make purchase from retails as most of the people are
owning membership card of one or more retail companies.
SMS/ E-mail’s are new way of promotion adopted by retailers and notable point is that
people feel good and associated when they get SMS or email from retailers and these
types of promotion helps customers to make their purchasing decision.
CONCLUSION
45
Primary objective of the study was to understand the impact of retail advertising on
customer purchasing decision. Research done on retail advertising served as the
secondary source of data for the project.
Through the study it was found that retail advertising serves as a comparison tool
for customer and also helps customer to make purchasing decision. It was seen that
people are spending more on their expenditure after seeing the advertisement and people
feel connected and interesting through new promotional tools like SMS & E-mail.
Thus it can be said that retail advertisement have a positive impact on customer buying
decision and through advertisement it is seen that people are spending more.
46
LIMITATION OF THE STUDY
47
LIMITATION OF THE STUDY
To carry out the research study the following limitations are faced:
a) Availability of sufficient data from different sources may be difficult.
b) Wrong selection of sample may create of wrong conclusion.
c) Time, cost and factor may cause difficulties.
d) Sample size may not be exact representative of the universe.
However a sincere effort has been put to overcome the expected limitations.
48
References
Anderson P M and Robin L G (1986), Marketing Communications: Advertising, Sales
Promotion, Public Relations, Display and Personal Selling Englewood Cliffs, New Jersey,
Prentice Hall
Andrews Rick L and Currim Imran S (2002), “Identifying Segments with Identical Choice
Behaviors Across Product Categories: An Inter-category Logit Mixture Model”,
International Journal of Research in Marketing 19 (1), March, 65-79
Brassington F and Pettitt S (2001): Principles of Marketing , Pearson Education, Prentice Hall
Keller, Kevin L. (1998), Strategic Brand Management: Building, Measuring, and Managing
Brand Equity, Upper Saddle River, NJ: Prentice-Hall.
Morschett, Dirk; Swoboda, Bernhard and Foscht, Thomas (2005), “Perception of store attributes
and overall attitude towards grocery retailers: The role of shopping motives”, The International
Review of Retail, Distribution and Consumer Research , 15 (4), 423-447.
Nicholas Alexander and Mark Colgate (2005), “Customers’ Response to Retail Brand
Extensions”, Journal of Marketing Management , 21 (3), 393-419.
I am Milon Mallick , a student of MBA from ramaiah Institute of management studies, Bangalore conducting a survey on “ An analysis on retail advertising and its effectiveness on consumer choice”. I seek your cooperation for providing following relevant information for my research work. I value your contribution and convey my sincere regards.
Name ………………………………………..
1) Your gendera) Male b) Female
2) Your age in years
3) What is your occupation ?a) Student b) Employed c) home maker d) business
4) Annual income (in rupees) : ……………………..
5) The retail advertisement has increased in
a) Newspaper
b) Radio
c) T.V
d) Magazine
e) Outdoor hoardings
6) Retail ads have increased in proportion to company ads
a) Agree
b) Somewhat agree
c) Neither agree / disagree
d) Somewhat disagree
52
e) Disagree
7) Due to retail ads, I spend more than I did earlier
a) Agree
b) Somewhat agree
c) Neither agree / disagree
d) Somewhat disagree
e) Disagree
8) I look for retail ads in newspaper for special offers a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
9) I switch on the radio and pay attention to retail offers a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
10) I compare prices shown in retail ads with those given by others a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
11) I am able to make better shopping decisions due to information gathered from retail ads
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never 12) I have membership card of retail
53
a) Yes b) No
13) I don’t mind gathering membership cards from new retailers
a) Yes b) No
14) I get SMS /email updates about new sales promotions by retailers
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
15) I always act on the information given in the SMS / email
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
16) I participate in the lucky draw contest done by retailers
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never 17) I don’t mind purchasing in advance when I see a good offer in retail ads
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never 18) I wait for retail ads to make my choice of store
a) Always
b) Often
c) Occasionally
54
d) Seldom
e) Never 19) I compare price and other various deals in retail ads to make my purchase
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
20) I spend more because of various offers & discounts in retail
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
21) I regret making new purchases on account of retail ads
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
22) I like retail ads that give information on prices
a) Always
b) Often
c) Occasionally
d) Seldom
e) Never
23) I want retail ads to give better schemes like ‘buy more for less’
a) Always
b) Often
c) Occasionally
d) Seldom
55
e) Never
APPENDIX-2
56
Synopsis for the Project on“A study on, “Retail advertising and its impact on consumer choice”.
”
By
Milon Mallick
Enrolment No. 2491000044
For partial fulfillment of the requirements of second year MBA curriculum of Two years Full time MBA (Industry Integrated) Programmed
Submitted to:
Through
No. 15, New BEL Road, MSRIT Post, MS Ramaiah Nagar,
Bangalore-560054
57
www.rimsbangalore.in
Project synopsis
Introduction :
Indian Retail Industry is standing at its point of inflexion, waiting for the boom to take place. The inception of the retail industry dates back to times where retail stores were found in the village fairs , Melas or in the weekly markets. These stores were highly unorganized. The maturity of the retail sector took place with the establishment of retail stores in the locality for convenience. With the government intervention the retail industry in India took a new shape. Outlets for Public Distribution System, Cooperative stores and Khadi stores were set up. These retail Stores demanded low investments for its establishment.
The retail industry in India gathered a new dimension with the setting up of the different International Brand Outlets, Hyper or Super markets, shopping malls and departmental stores.
The untapped scope of retailing has attracted superstores like Wal-Mart into India, leaving behind the kiranas that served us for years. Such companies are basically IT based. The other important participants in the Indian Retail sector are Bata, Big Bazaar, Pantaloons, Archies, Cafe Coffee Day, landmark, Khadims, Crossword, to name a few.
Future of organized retail in India looks bright. According to recent researches it is projected to grow at a rate of about 37% in 2007 and at a rate of 42% in 2008. It will capture a share of 10% of the total retailing by the end of 2010.
1. Title of the problem:
A study on, “Retail advertising and its impact on consumer choice”.
2. Statement of the problem:
Due to the changing trend in the field of advertising as per the launch of lot of me too product. The advertising is facing a cluttered situation , where many brand try to promote themselves by similar kind of advertisement. In such case the effectiveness of advertising is critical to impact
the customer purchasing behavior. The pattern, content and frequency of retail adds can have a direct impact on sales.
3. Objectives: To study retail advertising and its impact. To find different add strategies that a company can use to avoid clutter. To find how advertisement can be made effective. To find out what type of advertisement are preferred by the consumer.
4. Significance:
We will be able to find out the impact of retail advertising and what are the measures which the company should adopt to avoid the clutter and increase consumer choice favorably.
5. Scope:
The scope of the study is to evaluate retail advertisement and the effectiveness of various type of advertisement in the retail sector.
6. Limitation: Data collection from consumers in Bangalore only. Advertisement will not be shown only recall will be measured.
7. Research methodology: (d) Type of data sources:v. Tools of collecting primary data:
Questionnairevi. Sample size: 100 consumers
vii. Sampling data: simple random samplingviii. Tools of collecting secondary data:
Books Internet Magazines Journal
(e) Hypothesis :
59
Null hypothesis (Ho) : Retail advertising has no impact on consumer purchase decision.Alternative hypothesis (Ha): There is a significant impact of retail advertising on consumer purchase decision.
(f) Statistical tools for hypothesis testing:
Chi-square test, q- test etc.
8. Conclusion: On the basis of the research work, I will determine how retail advertisement can help create positive behavior in consumers.